Redbox, Verizon Grasp At Streaming Dollars, But Their Service Makes No Sense

In the world of online streaming video, Netflix, Amazon, Hulu, and HBO are all battling to control what content you watch and where you watch it. Now a new service is entering the brawl. And despite being backed by industry giants Redbox and Verizon, it has no clear advantage over its rivals.

Launched in public beta last month, Redbox Instant by Verizon hopes it can best its competitors with a low monthly subscription rate ($8 per month) and the unique feature of allowing members to borrow a limited amount of movies at Redbox's some 36,000 DVD kiosks in the U.S. However, there's a number of issues with this plan that makes it impossible for me to recommend this service to friends and family. To tick off the biggest problems: Redbox has far less content than its arch rival Netflix; it inexplicably offers no TV shows, essentially making it the opposite of Hulu; it has no original content like HBO Go; nor does it come with streaming access on an endless array of devices, as Amazon's Prime service does. Worse yet, talk with those behind the service, and they're almost unable to explain in any compelling fashion why consumers would want to spend cash on Redbox Instant as opposed to another streaming option. "It all starts with the people—if you want to join us, you have to be a big fan of movies," says chief product officer Joe Ambeault. "The second thing is we don't take ourselves too seriously—this is about fun, and about connecting friends and family. That's what's going to differentiate us."

Of course, it's impossible to understand how such a boilerplate answer will translate to customer acquisitions. Consumers care about high-quality content, unique features, and streaming access on devices like Xbox and Roku. But ask Ambeault what sets the service apart and he'll say, "One of our significant advantages is the brand equity that both of the parent companies bring to this joint venture." Imagine telling your parents that they should subscribe to the service because Redbox and Verizon have great brand equity. (Acknowledges Ambeault, "Yes, that's not something you'd say to your mom.")

Comparing these services will always be apples to oranges, in terms of price, content, and features. But after playing with its beta in recent weeks, Redbox Instant by Verizon feels like an awfully lazy attempt to compete with these already established players. Some of its freshest streaming titles (Thor, Transformers, Rango, The Lincoln Lawyer) are all available on competing services; in fact, I had trouble finding a single title that was available on Redbox Instant, and not on Netflix or Amazon Prime. The service is available on mobile products like the iPad and most Android devices, but not on Xbox, Google TV, or LG and Samsung televisions. It offers no TV shows, despite the fact that after years in the business, Netflix has noticed that two-thirds of its viewing is now for episodic content, while just a third of viewing is for movies. And for a company looking to differentiate, Redbox's online service looks remarkably similar to Netflix's design.

Executives dispute the comparison to Netflix's user interface. "It's not something we set out to do. If there is a similarity, it's because maybe we have similar goals. We've got the core Redbox colors, but if you step away from color and logo, we think the experience is a bit different," says Imran Maskatia, senior director of digital product management. Ambeault also promises the company will add more devices to Redbox Instant's roster in the coming months, and says the service has unique and compelling content to attract subscribers from other companies. "The two segments that we're pursuing are huge horror and thriller fans, so we are heavy on horror and thriller [content]," he says. Example? "2-Headed Shark Attack," Ambeault says.

"That's a good one," Maskatia says.

Ambeault is also sure to take a jab at Netflix's content strategy. "Rather than backing to our truck up to some studio in Burbank and taking whatever they put in the back, we spent a lot of time on picking the titles in partnership with those content providers," he says. (And as for TV content, Ambeault adds, "If your mom is not a movie lover, then she is not part of our initial target audience.")

The company's only advantage is its thousands of physical kiosks—ironic for a digital subscription service. Members have the option to venture to nearby kiosks, which are present at many Walgreens and Duane Reade stores, where they can take out up to four titles per month on DVD. It's the best feature of the service, or at least its most unique. However, the limited amount of DVDs that can be rented per month, in addition to the limited catalog of discs in each kiosk (they contain roughly 200 titles), make this a limited value proposition. And don't forget you'll have to deal with picking up the DVDs and returning them in person—an unpleasant notion for anyone dealing with the harsh winter season.

Still, the service is only in beta, and deserves time to grow. But as of now, I doubt if even shareholders of Verizon or Redbox's parent company Coinstar would want to use this service over Netflix or Amazon Prime.